Income Investors Should Know That Bamboos Health Care Holdings Limited (HKG:2293) Goes Ex-Dividend Soon

Bamboos Health Care Holdings Limited (HKG:2293) stock is about to trade ex-dividend in 4 days. Investors can purchase shares before the 15th of March in order to be eligible for this dividend, which will be paid on the 26th of March.

Bamboos Health Care Holdings's next dividend payment will be HK$0.025 per share, on the back of last year when the company paid a total of HK$0.05 to shareholders. Calculating the last year's worth of payments shows that Bamboos Health Care Holdings has a trailing yield of 6.1% on the current share price of HK$0.82. If you buy this business for its dividend, you should have an idea of whether Bamboos Health Care Holdings's dividend is reliable and sustainable. As a result, readers should always check whether Bamboos Health Care Holdings has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Bamboos Health Care Holdings

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Bamboos Health Care Holdings is paying out an acceptable 60% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Bamboos Health Care Holdings generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 49% of the free cash flow it generated, which is a comfortable payout ratio.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit Bamboos Health Care Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at Bamboos Health Care Holdings, with earnings per share up 8.3% on average over the last five years. Decent historical earnings per share growth suggests Bamboos Health Care Holdings has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Bamboos Health Care Holdings has delivered 3.8% dividend growth per year on average over the past six years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Has Bamboos Health Care Holdings got what it takes to maintain its dividend payments? While earnings per share growth has been modest, Bamboos Health Care Holdings's dividend payouts are around an average level; without a sharp change in earnings we feel that the dividend is likely somewhat sustainable. Pleasingly the company paid out a conservatively low percentage of its free cash flow. In summary, it's hard to get excited about Bamboos Health Care Holdings from a dividend perspective.

On that note, you'll want to research what risks Bamboos Health Care Holdings is facing. Every company has risks, and we've spotted 2 warning signs for Bamboos Health Care Holdings you should know about.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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